Compare and Contrast the Proprietary Theory & the Entity Theory

Please compare and contrast the proprietary theory and the entity theory.

Please discuss the entity theory of equity. Who is the center of interest with the entity theory of equity?

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The proprietary theory and the entity theory are both accounting theories that explain the methodology for individual or business budgeting (www.wisegeek.com). The theories offer a way to calculate what the value of individual goods and services along with the financial value of the overall business or person (www.wisegeek.com). Both theories state that accounting is required for businesses to understand their profits and losses (www.wisegeek.com). Accounting includes recording the financial value of all assets and liabilities of a business or individual on financial statements (www.wisegeek.com). The proprietary theory and entity theory are important to a business growth and planning because it gives the best method for the business in decision making of the cost of goods and services used (www.wisegeek.com).

The proprietary theory assesses the business as an extension of the owners and the theory believes that the business is not separate from its owners ...

Solution Summary

The solution compares and contrasts the Proprietary Theory and the Entity Theory.